Study finds Gulf permit backlog costs jobs, tax revenue

By TOM FOWLER, HOUSTON CHRONICLE

Published 12:01 am, Friday, July 22, 2011

Faster permitting of offshore oil and gas projects could create nearly 230,000 new jobs in 2012 and boost the economy by $44 billion, including a surge in tax revenue, according to an industry-funded study released Thursday.

The report by IHS CERA said job growth would extend beyond the Gulf Coast states, boosting employment indirectly as far away as California, New York, Florida, Illinois and Georgia.

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That's six months after the end of a federal moratorium on offshore drilling, which the government imposed after last year's Deepwater Horizon accident killed 11 workers and triggered a 5 million-barrel oil spill.

Permit approvals take 95 percent longer now than before the spill, the study says.

The delays are leading to lost opportunities for investments in the Gulf, which would create jobs and boost federal and state tax revenues, IHS CERA said.

Permitting delays also hurt future U.S. oil production as the slowdown in drilling postpones new discoveries, the study says, and faster permitting could lead to an additional 400,000 barrels per day in production by 2012.

"There is a need to better align the new regulatory environment with industry capacity, as the current pace of plan and permit approval is congested," said Jim Burkhard, IHS CERA's managing director for global oil, who co-authored the report.

Soon after the federal government issued the moratorium on deep-water drilling, it began reorganizing the agency that oversees offshore exploration and production, adding a number of new safety and environmental rules.

IHS CERA Chairman Daniel Yergin said in a conference call the study doesn't try to answer why the pace of permitting has slowed or how it should be fixed.

The outlook has changed somewhat since the November-to-April time frame of the IHS CERA study.

In June, Exxon Mobil Corp. announced a new discovery in the Keathley Canyon area of the Gulf with an estimated 700 million barrels of recoverable oil. Shell announced plans to invest $2.5 billion in its Cardamon field in the Gulf.

In a hearing last week, bureau head Michael Bromwich defended the agency's work, saying it can only act on the permits that have been filed. As of Thursday 18 permits were pending. Bromwich also said budget restraints are hindering recruitment of inspectors and other staff.